Engagement on Luton Council’s ‘budget for recovery’

Closed 7 Feb 2021

Opened 20 Jan 2021

Overview

Residents are being asked to email questions or provide feedback on Luton’s 2021/22 draft budget which will be debated on at full council on 17 February.

The council’s portfolio holder for finance Cllr Andy Malcolm and Chief Executive Robin Porter have recorded a webinar to respond to resident questions and comments. 

 

 

Send your comments and questions to 2021budget@luton.gov.uk 

Why your views matter

Luton Council has drawn up its draft 2021-22 budget plans to continue to navigate through the devastation caused by the Covid-19 pandemic and the ongoing increasing demand for services.

Preparations take into account the challenge of the virus to the council’s finances and its effect on the local economy, along with uncertainties surrounding medium-term future income from the council’s airport company London Luton Airport Ltd (LLAL), business rates and council tax.

The proposed budget is shaped around the council’s Luton 2020-2040 Vision – a place to thrive, a unifying mission to make the town a healthy, fair and sustainable town where everyone can thrive and no-one has to live in poverty. These objectives have become even more relevant due to the impact of the pandemic.

Council tax

Among the difficult decisions the council has set out is a proposed 1.99 per cent increase in council tax – plus a three per cent precept needed to pay for chronically underfunded adult social care, something councils across the country are having to consider due to the impact the pandemic.

The proposed increase in council tax equates to an additional average increase of £1.07 per week for the majority of households in Luton; but will still ensure Luton’s council tax rate remains the lowest in Bedfordshire and the sixth lowest in England amongst unitary authorities.

Savings

The rise in council tax is set against a background of more than a decade of austerity in which the council has already made savings of £157 million due to reductions in central government support.

The council took decisive and early action last summer – ahead of many of other local authorities – setting an emergency budget to make savings of £22 million to stabilise our financial position and ensure we could continue to provide essential services.

The 2021/22 budget requires an additional £1.2m of new savings, although measures are expected to be achieved largely through efficiency savings and therefore will have minimal impact on the public. The council expects to have to find another £7m of savings over the following two years

Covid-19 and the council’s airport company

To bolster finances, the council has focused in recent years on growing its commercial income, including increased revenue from LLAL, in order to fund vital services – but Covid-19 has been a catastrophe for the aviation industry.

Therefore as part of the budget process, members will additionally be asked to approve a framework for funding an ongoing stabilisation plan for LLAL to ensure it survives the current crisis facing the industry.

The framework allows for a range of potential measures, including loans, capital injection and other actions aimed at easing cash flow, to ensure that Luton’s communities and voluntary sector can continue to benefit from the airport in the short and medium term, without impacting on the council’s 2021/22 budget or medium term finances.

The council will make a return on the loans as a result of the council being able to borrow money at a cheaper rate of interest than LLAL can – and then LLAL repaying interest to the council at a market rate which is higher than the rate it borrows at.

While there will be no dividend from LLAL next year, the council will still receive £18.69 million of net interest and £3.1m of rent from the company in 2021/22 which helps keep council tax low and will fund vital services.

LLAL will also still donate £7.4m to voluntary and community organisations in Luton to provide services to support and strengthen communities and the residents of the town.

A comment from the portfolio holder

Councillor Andy Malcolm, Portfolio Holder for Finance, said: “This is another difficult budget for the council to consider, not least because of a considerable council tax rise for residents which has been identified and presumed by central government. Thankfully, the strong and decisive action we took earlier in the year means we are in a much more stable financial position than many other authorities.

Cllr Malcolm continued: “I also want to make absolutely clear that the medium term stabilisation of our airport company has absolutely no impact on the increase in council tax or the further savings required to balance our budget in 2021/22.

“Although there is uncertainty regarding future dividends from our airport company in the short to medium term, there remains significant confidence in the ongoing long-term success of our major asset. Luton airport will be key to our town’s recovery from Covid 19 and we are collectively responsible for steering a course through the pandemic’s devastating impact in the best interests of all Luton’s residents.

“Even though there can be no dividend for the time being, the net interest that the council will continue to receive from LLAL will enable ongoing support for our front-line services, and support the incredible work undertaken by our voluntary and community service partners who deliver life-changing interventions to Luton’s residents on a daily basis.”

Next steps

The council’s budget proposals have been considered by the council’s Finance Review Group and will be going to Executive on 20 January and then for a second time on 9 February; and then for approval by full council on 17 February.

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